7. Voter-approved expenditure limitations

Home rule—Arizona Constitution, Article IX, §20(9), allows a city or town to adopt an alternative expenditure limitation (home rule) with voter approval at a regularly scheduled election for the nomination or election of its governing board members. A home rule prescribes the method the city or town will use to calculate its own expenditure limitation each year. Voters must approve a home rule prior to the first fiscal year in which it applies. Home rules apply for 4 succeeding fiscal years, after which the constitutional expenditure limitation becomes effective, unless voters adopt a new home rule.

Permanent base adjustment—Arizona Constitution, Article IX, §20(6), allows a city or town to permanently adjust its base limit with voter approval at a regularly scheduled general election or at a nonpartisan election held for the nomination or election of its governing board members. The Economic Estimates Commission will use the adjustment to calculate the constitutional expenditure limitation beginning with the fiscal year immediately following the fiscal year that voters approve the permanent base adjustment. Permanent base adjustments apply to all future years; however, voters may adopt additional adjustments.

One-time override—Arizona Constitution, Article IX, §20(2)(c), allows a city or town to exceed its expenditure limitation with voter approval at a special election held on the third Tuesday in May or at a regularly scheduled election for the nomination or election of its governing board members. A one-time override does not allow a city or town to establish an alternative expenditure limitation for 1 year. Instead, a one-time override allows a city or town to exceed its constitutional expenditure limitation by a specific amount in the fiscal year after the election. As such, the city’s or town’s resolution and ballot language should include the specific amount of excess expenditures that it is asking voters to authorize.

Yes. A city or town that has an adjusted base limit may adopt a home rule. A city or town should use the adjusted base limit to calculate the estimated constitutional expenditure limitation it presents in the publicity pamphlet. The permanent base adjustment does not otherwise affect the home rule process.

A city or town can obtain current inflation factors on the Arizona Department of Revenue’s website. The Department posts updated inflation factors semiannually in March and October. A city or town preparing a home rule packet for fiscal years 2024, 2025, 2026, and 2027 should use the inflation factors for the 4 years beginning with calendar year 2022 to calculate those years’ constitutional (State-imposed) expenditure limitations.

If voters do not approve a home rule proposal on the ballot, the constitutional expenditure limitation applies, and the city or town may not submit a new home rule proposal to the voters for at least 2 years. However, the city or town may submit to its voters a permanent base adjustment or one-time override as described in voter-approved expenditure limitations FAQ #1.